Last summer, Kenneth Feinberg was appointed the federal government’s “pay czar” over seven of the biggest private companies that had taken taxpayer-funded TARP bailouts to stay alive. (As an aside, that made Feinberg part of the right wing’s “Great Czar Poutrage of 2009″ — remember that one?)
By October, Feinberg announced that he was cutting the base salary of top executives at those companies by an average of 90 percent; total compensation paid out in cash, stock and perks would be cut in half. In the minds of some, that drastic action meant real trouble ahead for those companies, as the AP reported at the time:
“These people are considered the brains of the machine. They are who can pull you through the tough times,” said Steven Hall, who runs an executive compensation firm that bears his name. “This will give them reason to leave.”
“There will be a fallout,” said Janice Reals Ellig, co-CEO of the executive search firm Chadick-Ellig. “Talent that is short-term-focused because they have big mortgages, college education payments and other things will feel more pressure to leave.”
A Bank of America spokesman, Scott Silvestri, said competitors not subject to pay restrictions “already are exploiting this situation by identifying our top performers and using pay concerns to recruit them away for fair market compensation.”
Since then, Bank of America and Citigroup have paid back their TARP loans and have left Feinstein’s direct control. But something interesting happened at the five remaining companies: The tsunami of executive departures that some predicted never happened. Today, Reuters reports:
The Treasury, where Feinberg’s office is housed, also said about 84 percent of the top earners under the pay czar’s jurisdiction are still with their firms despite having their pay dramatically cut back.
“People at these five companies are not leaving the companies to go elsewhere,” Feinberg told a news briefing. “There is a striking number of holdovers.”
At today’s briefing, Feinberg also announced his latest actions regarding 2010 executive compensation levels at those five companies. Overall, he is cutting total compensation by 15 percent and cash payments by 33 percent. More specifically, as the New York Times reported:
General Motors, for example, wanted to pay 20 of its 25 highest earners cash salaries of $500,000 or more, according to people close to the negotiations. Mr. Feinberg approved that amount for only eight executives, including Edward R. Whitacre, G.M.’s new chief executive. His $9 million pay package includes a $1.7 million cash salary, with the rest in stock.
At Chrysler Financial, only eight people have total pay of more than $500,000. At Chrysler and GMAC, none of the 25 highest earners are expected to receive a cash salary of more than $500,000. Michael Carpenter, GMAC’s new chief executive, is receiving his entire compensation in stock.
GMAC, the only company to receive three helpings of taxpayer aid, initially offered Mr. Carpenter a $9.5 million pay package. Mr. Feinberg rejected that, according to people close to the situation. Mr. Carpenter will now receive $8 million of so-called salary stock, which he cannot sell for at least three years.
Apparently, $500,000 plus stock options is enough to live on in this economy.